Investigator reveals size of poker machine crime

State and federal authorities have evidence NSW’s 95,000 poker machines are being used as laundering machines for illicit cash that is “easily in the hundreds of millions” of dollars, with allegations that, nationwide, more than $1 billion from the proceeds of crime is likely being cleansed through pubs and clubs with gaming machines.

The scale of Australia’s pokies crime problem has been revealed by one of the nation’s most senior gambling industry officials and comes as CCTV video from a central Sydney pokies venue shows a money-laundering syndicate operating with impunity.

The vision, obtained by The Age, The Sydney Morning Herald and 60 Minutes, reveals the syndicate effectively commandeering the pokies venue to launder tens of thousands of dollars, with a large number of people apparently involved in the co-ordinated scheme. It shows two different methods: some in the group are working on linked gaming machines chasing an almost guaranteed jackpot, while another figure is feeding banknotes into two poker machines at once. In an hour, the man feeds $27,000 into the machine, then bets just $1 and claims the rest as “clean” gambling winnings.

The group is suspected to have operated in several venues and is one of several criminal syndicates using poker machines in pubs, clubs and casinos down Australia’s east coast.

In a rare interview, chief NSW gaming investigator David Byrne said multi-agency investigations indicated the sheer size of the pokies dirty money problem in the state, in comments likely to put pressure on the Perrottet government to act to counter organised crime. Extrapolated to other states with pokies, the figure could be more than $1billion, Mr Byrne said.

In the first four weeks after the COVID-19 lockdown ended, Mr Byrne’s teams of investigators at the NSW Gaming and Liquor department identified 140 pubs and clubs and more than 130 individual gamblers associated with money laundering activity.

“That’s only in the Sydney metro area, that’s not the entire NSW landscape,” he said.

Money laundering is the process of taking illicit cash from criminal enterprises and making it look like legitimate earnings, or, in this case, winnings from gambling.

“You’re talking about, at the worst level, child exploitation, human trafficking, firearms trafficking ... terrorism funding – all of those can be packaged up in the same conversation as money laundering,” Mr Byrne said.

Mr Byrne said it was almost certain pokies states such as Victoria faced similar issues, and urged the gambling industry and groups such as industry lobbyists ClubsNSW to take the issue seriously.

“I don’t think that clubs, where good, family orientated people across NSW go to have dinner, want [patrons] to be walking past organised criminals laundering cash,” he said. “I think, based on what we’re finding, they [pokies venues] need a wake-up call, definitely.”

Mr Byrne said scrutiny of smaller poker machine venues should be similar in scope as that recently applied to the giant casino firms Crown Resorts and Star Entertainment Group.

“If it’s good for them, then it’s probably good for the clubs as well,” Mr Byrne said.

Investigations by state and federal agencies have suggested pubs and clubs are failing to report these concerns. Since January 2018, only 5.5 per cent of NSW venues with electronic gaming machines have submitted a suspicious transaction report to money laundering agency Austrac, despite evidence and intelligence suggesting the problem involves many more venues.

The clubs and pubs that did submit the reports often filed them too late or under-reported the suspected money laundering and proceeds of crime gambling, undermining the ability of law enforcement officials and regulators to investigate the suspected criminals behind the activity.

Mr Byrne has become the first senior government official to challenge the claims of Australia’s powerful gaming lobby that money laundering and organised crime in pokies venues is a myth. His concerns have been privately backed by senior state and federal police officials.

In NSW, customer service minister Victor Dominello’s planned reforms to counter money laundering in pubs and clubs have been stymied by opposition from his colleagues and the gambling lobby, while the Andrews government in Victoria is still considering recommendations from the Finkelstein royal commission into Crown Resorts to introduce major pokies industry reforms to prevent problem gambling.

This masthead can also reveal Mr Dominello’s office has been privately threatened by gaming industry figures that it would be targeted if it continued to champion pokies reform, including the proposal for a cashless card that allows a punter to limit the amount they intend to bet.

One pokies industry lobbyist warned Mr Dominello’s office that it would “get ugly” if he persisted with his reforms, while another said the state Coalition government would be subject to a similar campaign that led former prime minister Julia Gillard to drop her pokies reform package before the 2013 election.

Mr Byrne said a cashless card would help fight the significant money laundering and proceeds of crime problems identified by his analysts and investigators in partnership with the NSW Crime Commission and anti-money laundering agency Austrac. The cards would “negate the ability for people to walk in with a bag of cash and put $30,000 into a machine.”

“It’s definitely a disruption if nothing more and would go a long way to reducing the frequency of this type of behaviour.”

In a statement, ClubsNSW downplayed concerns there may be a significant dirty money problem infecting the industry it represents or that more reform is needed, noting clubs had already funded a centralised poker-machine data system used by authorities to track suspicious play. It said it would assist Austrac “if and where” money laundering was occurring.

At the conclusion of last year’s damning NSW inquiry into the organised crime infiltration of Crown Resorts casinos, commissioner Patricia Bergin described the introduction of a cashless gambling card as a “powerful mechanism to combat money laundering”.

In his recent royal commission report into Crown in Victoria, Commissioner Ray Finkelstein recommended requiring any Australian resident using a poker machine at Crown to use a special card that makes them set a daily, weekly or monthly limit on how long they can play and how much they can lose.

An investigation by The Age, the Herald and 60 Minutes has uncovered evidence of an Asian crime syndicate involved in illegal prostitution and suspected human trafficking washing funds via pokies venues in Queensland. Another case study uncovered by federal law enforcement agencies involves a woman involved in the suspected laundering of $38 million in pokies venues and casinos in Sydney, the ACT and Victoria.

“We’ve identified an individual who won in excess of $1 million from an RSL club and was also associated with about 30-odd million dollars worth of activity across casinos in Australia,” Mr Byrne said. “So not just NSW, the person travelled to other states and is associated with [suspected money laundering] activity.”

The crackdown on money laundering and organised crime in casinos is also pushing money laundering to pokies venues, four law enforcement sources said.

“The groups and the people who are suspicious in the casino environment are often identified in the registered club and pub space,” Mr Byrne said.

“The challenge has always been finding the resources and time and budget to address” money laundering in the gaming environment, Mr Byrne said.

NSW’s 95,000 poker machines bring in $1 billion in state taxes each year and create as many as 100,000 jobs, including in sophisticated gaming machine manufacture.

The state government anticipates it will generate $2.8 billion in gambling taxes this financial year, a 27 per cent increase from 2019-20.